Rumors about Chesapeake Layoffs

[BFizzy]

I just heard from a Chesapeake employee that they are laying off 300. They are also offering surpervisors early retirement pacakges.

Apparently, it will mostly affect the employees that work with the SE OK asset that they recently sold off.

[ultimatesooner]

that sucks but its not surprising the way financial things are going right now

[metro]

Wow. Bummer.

[adaniel]

It doesn't surprise me considering all of the hedging, wall street games they like to play. It was only a matter of time before it caught up to them.

I feel sorry for all the people who got caught up in this mess.

[Luke]

Bailout shmaleout.

[FFLady]

Rescue Shmescue........

[OKCMallen]

If you follow the way CHK chooses to do business, you'll find that probably a lot of it has to do with their own decisions and not the overall market (although oil and gas prices droipping so much lately hurts quite a bit).

Be worried when Devon starts laying off people. They play the game a bit more conservatively.

[BFizzy]

Devon is still heavily recruiting.

[Steve]

We checked into this. Chesapeake says three, not 300 people, were let go.

[jbrown84]

LOL

I guess we can all calm down now.

[Kerry]

Layoffs are sometimes a smoke and mirrors game. When I worked in HR we eliminated 150 position one time. The investors loved it but really we just closed 150 open position.

[BFizzy]

I was just passing along information that was given to me. I suppose it could just be a rumor at Chesapeake, but I was even given the reasons why they were doing it.

I guess time will tell.

[Steve]

BFizzy, I'm not doubting you. I took you seriously enough that we checked into it as soon as I saw your posting.
-Steve

[lasomeday]

My friend that works at Chesapeake said they are letting contract employees go. That is temporary and part time people. She said that it was more like 200 people.

[OKCTalker]

Layoffs are sometimes a smoke and mirrors game. When I worked in HR we eliminated 150 position one time. The investors loved it but really we just closed 150 open position.

Both numbers (3 and 300) are probably close to accurate. They may have only fired three "employees," but 300 people are brushing up their resumes.

[OU Adonis]

I just started as a Contractor. They are still hiring.

[gmwise]

If you follow the way CHK chooses to do business, you'll find that probably a lot of it has to do with their own decisions and not the overall market (although oil and gas prices droipping so much lately hurts quite a bit).

Be worried when Devon starts laying off people. They play the game a bit more conservatively.

Amen

[bigjkt405]

A temporary co-worker of mine was just hired on at CHK, starting next week.

[adaniel]

For what its worth, my friend who is an accountant there told me they are cuting back on new wells, curbing new hires, selling off some small assets, etc.

I don't think they're in trouble, CHK is VERY leveraged and I imagined they are being hurt more by this current credit crunch and leveling off of gas prices more than other oil and gas companies, who are probably sitting on a wad of cash thanks to this summer's run up in prices.

I would be concerned that if this credit crisis lasts a long time (i.e. this time next year) and CHK has trouble paying their bills, they could become a takeover target.

[OUGrad05]

Couple things guys, I work in the industry have for a few years...chesapeake is highly leveraged but still profitable even at 7 dollar gas. I talked with a friend of mine who has been with CHK for three years now. They are not at least at this point doing any layoffs. They let a few people go in several areas when they sold some properties. He didn't know how many but appearantly there was a rumor going around that they were going to lay people off which was rebutted from within the company.

As has already been said, if Devon starts laying people off there's a big problem. CHK will start long before Devon....IF things were to get nasty.

[OUGrad05]

For what its worth, my friend who is an accountant there told me they are cuting back on new wells, curbing new hires, selling off some small assets, etc.

I don't think they're in trouble, CHK is VERY leveraged and I imagined they are being hurt more by this current credit crunch and leveling off of gas prices more than other oil and gas companies, who are probably sitting on a wad of cash thanks to this summer's run up in prices.

I would be concerned that if this credit crisis lasts a long time (i.e. this time next year) and CHK has trouble paying their bills, they could become a takeover target.

THat pretty much mirrors what I've seen and heard from my friends down there

I don't see them becoming a takeover target...far FAR too much debt.

[Midtowner]

Apparently they laid off around 3,000 independent-contractor landmen in the Barnett Shale area.

That's the rumor I heard.

[Turanacus]

From El' Wall Street . . . . .

Credit Crunch and Sinking Prices Threaten Chesapeake Energy's Growth
By BEN CASSELMAN

Chesapeake Energy Corp. is scrambling to sell assets and cut costs as falling energy prices and tightening credit threaten to derail the company's dramatic growth.

The Oklahoma City company has spent aggressively and borrowed heavily to fuel its climb this year to become the largest U.S. natural-gas producer. Its efforts were supported by natural-gas prices that leaped to a high of $13.577 per million British thermal units in July before fears of a supply glut sent prices plunging. Natural gas settled at $6.825 Thursday on the New York Mercantile Exchange.

Now Chesapeake is dramatically cutting back the costly land-leasing program that defined the company's rocketing growth.

It also faces the difficulty of trying to sell some of its gas-producing properties in South Texas in what has become a buyers' market. The sale is on top of other asset sales and spending cuts Chesapeake announced in September.

Charles Maxwell, an energy analyst who sits on Chesapeake's board, said the company suffered from "an excess of enthusiasm" when prices were rising earlier this year.

"I didn't think it would come to this," Mr. Maxwell said, adding that he believes the company's long-term prospects are solid.

Chesapeake co-founder and chief executive Aubrey McClendon said his company expects to end the year with $5 billion to $6 billion in cash -- enough to keep growing without tapping the capital markets.

The company had no cash at the end of the second quarter.

"We can continue to be the number one driller in America, the number one leaser in America ... because we're a big company, we generate a lot of cash," Mr. McClendon said.

He added that the company has insulated itself from falling natural gas prices with a hedging program that has effectively locked in an average price of $9.25 per million BTUs for 75% of its expected 2009 and 2010 production.

Nonetheless, Chesapeake's dilemma drives home how the credit crisis is threatening the business model of many independent oil and gas producers in the U.S. -- a model Mr. McClendon helped create. As gas prices rose and new technology unlocked vast new reserves of oil and gas, companies leased millions of acres of land, often at sky-high prices, and counted on being able to borrow money and sell shares to get the money to drill it.

Chesapeake was especially aggressive, at one point planning to spend $18 billion in 2008, more than three times its operating cash flow. Last spring, the company raised more than $3 billion in debt and equity despite promising the previous fall not to tap the capital markets "for the foreseeable future."

Chesapeake's shares hit a high of $69.40 on July 2, up 77% from the start of the year. Its shares closed at $17.97 Thursday on the New York Stock Exchange.

The extensive drilling by Chesapeake and its peers led to fears in recent months of an oversupply of natural gas, sending prices tumbling.

Mr. McClendon said the company will spend less in the future, but only because it's already got most of the land it needs.

But that land is only valuable if companies have the money to drill it -- and a growing number of analysts are skeptical that Chesapeake and some of its peers will be able to find enough money to drill all the land before the leases expire.

In recent weeks, a series of companies have announced billions of dollars worth of cuts to their capital budgets. Chesapeake itself led the way, announcing Sept. 22 that it would cut its capital budget by $3.2 billion, or 17%, through 2010. The company also said it planned to sell $1.75 billion worth of assets on top of the nearly $7 billion of assets the company has already sold this year.

Mr. McClendon said the company is slowing its acquisition of new land and plans to cut about a quarter of its 4,000 land men, private contractors hired to lease land on behalf of the company.

In Louisiana, where Chesapeake helped create a leasing frenzy earlier this year, the company's leasing has all but stopped, according to attorneys representing landowners there. The company has scaled back even further in Pennsylvania, where Tom Murphy with the Penn State Cooperative Extension says Chesapeake has canceled some leases before they have been finalized. Mr. McClendon said Chesapeake has delayed lease agreements, but denies canceling any signed deals.

"There are a lot of disgruntled individuals who thought they had a deal on the table and didn't realize the company had an out," Mr. Murphy said.

[blangtang]

pls delete post-duplicate

[blangtang]

however, saw channel 5 posted up doing a report about how they were laying off from a unit they sold. Something to do with a shale reserve in Appalachia.

that's all i gots.